How to correct "TypeError: 'NoneType' object is not subscriptable" in recursive function?

This simply means that either tree, tree[otu], or tree[otu][0] evaluates to None, and as such is not subscriptable. Most likely tree[otu] or tree[otu][0]. Track it down with some simple debugging like this:

def Ancestors (otu,tree):
    try:
        tree[otu][0][0]
    except TypeError:
        print otu, tre[otu]
        raise
    #etc...

or pdb

One of the values you pass on to Ancestors becomes None at some point, it says, so check if otu, tree, tree[otu] or tree[otu][0] are None in the beginning of the function instead of only checking tree[otu][0][0] == None. But perhaps you should reconsider your path of action and the datatype in question to see if you could improve the structure somewhat.